After two straight months of growth in residential construction, new government data showed a surprisingly steep pullback in U.S. housing activity during August.
The Commerce Department reported Wednesday that housing starts dropped 8.5% to an annualized pace of 1.307 million units. That compares with a revised 1.429 million rate in July, which had marked a 3.4% gain from the prior month.
Economists had anticipated a much smaller decline of around 4.1%, projecting starts at 1.370 million.
The report also pointed to weakness in building permits, a forward-looking gauge of housing demand. Permits fell 3.7% to a 1.312 million annual rate, following a 2.2% decrease in July to 1.362 million. Analysts had been expecting an increase of 1.2% to roughly 1.370 million.
Looking ahead, the Energy Information Administration will release its weekly update on crude inventories at 10:30 a.m. ET. Market consensus is for a 1.5 million-barrel drawdown, reversing a 3.9 million-barrel build in the prior week.
Later in the afternoon, the Federal Reserve will unveil its latest policy decision at 2:00 p.m. ET, followed by Chair Jerome Powell’s press conference at 2:30 p.m. ET, events that investors are closely watching for signals on the outlook for interest rates.
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